Unproductive PEs bleeding state coffers dry

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KATHMANDU: The government spent close to Rs 200 million of taxpayers’ money this fiscal on salary and other expenses of staff in defunct public enterprises.


Ministry of Finance statistics shows that seven state-owned enterprises that are knee-deep in debt, were given loans amounting to Rs 191.63 million this fiscal to clear staff liabilities.


National Trading Limited received Rs 85.20 million to give gratuity to 60 retired staff.


Although the government had decided to shut it down citing growing private sector competitiveness, it has not been able to implement the decision so far. As a result, taxpayers’ money is being spent to clear staff liabilities.


Second in the list of PEs exhausting taxpayers’ money is Nepal Drugs Limited. It took Rs 56.76 million from the Finance Ministry this fiscal.


Of the amount the state-owned pharmaceutical took, Rs 30 million was used to pay salary and the remaining Rs 26.76 million went for gratuity payment.


Nepal Drugs, which has outstanding liabilities of Rs 600 million, still has 243 staff members in its payroll despite being closed for the last four years. Although the Cabinet has already approved a voluntary retirement scheme at the company, the process of lay offs has not begun.


Another company exhausting state coffers is Nepal Railway Company. It uses a beat-up train on the 29-km Janakpur-Jaynagar section. It received Rs 26.50 million to pay salaries.


Among others, Herbs Production and Processing Centre received Rs 12.70 million, National Productivity and Economic Development Centre took Rs 4.15 million, Nepal Orind Magnesite got Rs 3.25 million and Nepal Metal Company walked away with Rs 3.07 million to pay salary to staff.


Most of these companies were set up with the objective of delivering services to the public, but they failed to live up to the promise due to overstaffing, political interference, trade union troubles, frequent change in board members and chief executives, inability to compete with the private sector and lack of strong leadership.


Ironically, two of these enterprises — Nepal Orind Magnesite and Nepal Metal Company — have not even started operations from the day they were established.


Successive governments have formed committees to chart out their future course, but most of the reports have been shelved.


“If the government fails to take concrete decision on their future, they will continue to pile up losses, becoming even bigger liabilities,” chief of Public Enterprises Board Bimal Wagle said.


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